American Airlines will give $30 million from Boeing 737 Max settlement to workers
American Airlines has reached a confidential deal with Boeing over the grounding of 737 Max jets for 2019 and will give $30 million back to employees through its profit-sharing distribution in March.
The settlement only covers damages that Fort Worth, Texas-based American Airlines incurred in 2019 because there is no timeline for when the Federal Aviation Administration will clear the Max for a return to service.
“Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers,” American’s Chairman and CEO Doug Parker said in a statement. “Our ability as an airline to weather these unprecedented times is thanks to our phenomenal team, and it was important to us that we get a deal done before the end of the year.”
The $30 million distribution will give about $300 extra to each of American’s 107,000 employees. But the amount will vary depending on position and experience.
The 737 Max was grounded by the FAA and other worldwide regulators in early March 2019 after crashes in Indonesia and Ethiopia killed 346 people. The crashes have been blamed on a faulty anti-stall software system. After projections that the 737 Max would be approved to fly again through 2019, the FAA warned Boeing that it would take its time to make sure fixes to the plane are safe.
In the statement from American Airlines, Parker said the company is distributing the money this year to employees even though it will be received over several years.
Airline leaders such as Parker and Southwest Airlines CEO Gary Kelly have shown increasing frustration with Boeing over the 737 Max crisis as the groundings stretched on through the fall and into the new year.
Southwest has the largest fleet of Boeing 737 Max jets of any airline with 34, along with 41 more that were supposed to be delivered in 2019 and more in 2020. American Airlines owns 24 of the planes, the second-most of any U.S. carrier, with 16 more scheduled for 2019 and 10 scheduled for 2020.
American Airlines said it expected a $540 million loss for 2019 due to the 737 Max problems.
Allied Pilots Association spokesman Dennis Tajer said the $30 million pool for employees seems to cover losses to employee profit-sharing for 2019 but not lost flying time for pilots.
“The pilots at American Airlines due to the Max being grounded have had fewer flying opportunities and less pay,” Tajer said. “They can’t just go out and fly an Airbus.”
If pilots aren’t “made whole” through a settlement between Boeing and American, the pilots union will be obligated to take legal action, Tajer said.
The Southwest Airline Pilots Association has already sued Boeing, and that case is being debated in federal court.
American’s flight attendants expect more compensation to come in the future, although it’s harder to judge how flight attendants were affected compared with the pilots, said Lori Bassani, president of the Association of Professional Flight Attendants.
“One way we feel this is the impact on our flight attendants’ psyches from the fear of flying on the plane,” Bassani said. “Obviously, the 737 Max issue is not done yet.”
Southwest’s deal, reached in December, will make $125 million available for employees and will also be given to employees through profit sharing. The difference in payouts at Southwest and American is due to the greater number of planes Southwest has been without as well as a bigger profit-sharing pool.
Southwest gives 15% of earnings back to employees while American gives 5%.
American has about 107,000 employees. Profit sharing is distributed to employees based on factors such as their position and experience.
American Airlines distributed about $175 million through its profit-sharing program in 2019.
Boeing has set aside about $5 billion to pay settlements for the 737 Max grounding.
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